- Falcon USD (USDf) has lost its peg to the U.S. dollar, dropping as low as $0.98 amid concerns about its backing.
- The stablecoin, with a market cap of $540 million, is supported by diversified crypto assets, but doubts emerged over the quality and transparency of its collateral.
- DWF Labs, manager of USDf, claims that 89% of USDf is backed by stablecoins and Bitcoin, while 11% comes from altcoins.
- Transparency reports show that the majority of reserves are held off-chain and lack detailed breakdowns or checks on liquidity and ownership.
- DWF Labs has faced controversy in the past, raising concerns about their use of illiquid tokens and previous allegations of misconduct.
Falcon USD (USDf), a stablecoin issued by DWF Labs, briefly lost its peg to the U.S. dollar on the morning of July 8, 2025. The token’s value dropped to $0.98, raising questions about the asset’s reliability after only a few months in the market.
USDf, which has a reported market capitalization of $540 million, is described as being backed by diversified crypto assets. However, recent doubts surfaced about the nature of those assets and the stability of the reserve, according to price data from CoinMarketCap.
On-chain liquidity for USDf has declined rapidly, prompting concerns online about the risk of a major stablecoin collapse. In a post to the Resupply governance forum, independent DeFi advisor LlamaRisk highlighted a lack of transparency and questioned the quality of assets behind USDf.
DWF Labs Managing Partner Andrei Grachev responded to criticism on social media. He stated that “USDf backing can include any assets that can be hedged properly by perps,” adding that 89% of assets are in stablecoins and Bitcoin, with the remainder in various altcoins. Grachev suggested that some competitors were coordinating negative campaigns, saying they “are not able to compete fairly.”
Data from Falcon Finance’s Transparency Dashboard shows that USDf is 117% collateralized by $635 million in crypto assets. Of this total, only $25 million is held on-chain, with $610 million off-chain and classified into broad groups such as “Stablecoins” (15%) and “Others.” The most recent reserve report does not address factors such as liquidity, volatility, or the impact of asset liquidations. Auditor HT Digital also noted it had not verified control or ownership over the stated reserves.
In response to continued questions, Grachev promised updates to the transparency dashboard, stating in a reply on X that information on asset types would be itemized by the following week.
DWF Labs has faced multiple controversies, including allegations of market manipulation, lack of transparency, and a widely reported incident in which a company partner was accused of drugging a job applicant in Hong Kong. Some observers have suggested that DWF Labs may be using illiquid or low-market-cap tokens to back USDf, allowing them to exit from large holdings, a strategy that led to losses in previous stablecoin failures.
The situation remains closely watched as users look for updates about the reserve structure and future plans for maintaining USDf’s stability.
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